Freight Fraud Has Gone Corporate

Freight fraud is only getting worse, and the industry is struggling to keep up with the tactics targeting businesses. CargoNet data shows cargo theft incidents climbing by double digits year over year, with average losses now exceeding $200,000 per incident. But the raw dollar figures only tell part of the story. Behind every stolen load is a web of identity fraud, spoofed communications, and coverage gaps that can leave brokers and carriers financially exposed long after the trailer is recovered or written off.

Jamie Cannon, Senior Vice President of Logistics Services at Reliance Partners, has a front-row seat to how the fraud landscape is reshaping insurance risk across the freight industry. In a recent conversation with FreightWaves, Cannon broke down how fraud has evolved, where AI is accelerating the threat, and why brokers are setting themselves up for expensive surprises when they treat insurance as an afterthought. 

The freight fraud playbook has changed. In decades past, a trailer left unattended at a truck stop or a driver who disappeared with a load would have been isolated incidents, but what used to be a crime of opportunity has matured into something far more calculated and difficult to detect. 

“Freight fraud has moved from opportunistic theft to organized, technology-enabled deception,” Cannon said. “The bigger shift is identity-based fraud: bad actors impersonating legitimate motor carriers, brokers, dispatchers, or factoring companies to get control of freight or payment.”

Cannon outlined a long list of schemes hitting the market right now, including fraudulent carrier identity, double brokering, fictitious pickups, spoofed emails, altered certificates of insurance, fake dispatch instructions, and payment diversion. The common thread is that they’re designed to pass initial scrutiny.

“The MC number may be real. The certificate may look real. The email signature may look real,” Cannon said. “But the person communicating may have no connection to the actual carrier.”

That disconnect is where the insurance problem begins. When a broker tenders a load to what turns out to be a fraudster operating under someone else’s credentials, the resulting claim doesn’t always land cleanly under traditional contingent cargo, motor truck cargo, or broker liability policies. 

“That is where the fine print matters, and unfortunately the fine print is usually where the expensive surprises live,” Cannon said.

If organized fraud raised the baseline threat level, artificial intelligence is compounding it. Cannon described AI as a force multiplier for bad actors who no longer need technical sophistication to produce convincing fakes.

“AI is making fraud faster, cleaner, and harder to spot,” Cannon said. “Fraudsters no longer have to send sloppy emails with obvious red flags. They can create professional-looking communications, fake documents, convincing carrier profiles, cloned voices, and phishing attempts that feel very real.”

According to Cannon, AI-enabled fraud is changing how underwriters evaluate risk when writing cargo and liability policies. Loss history and revenue, which were traditional pillars of the underwriting process, are no longer sufficient on their own.

“They are looking much harder at process,” Cannon said. “How does the broker verify carrier identity? Are they relying on one load board check, or do they have layered vetting? Are they confirming phone numbers and emails from independent sources?”

Underwriters want to see operational discipline, not just clean financials. According to Cannon, brokers who can demonstrate robust vetting protocols on the front end will find the underwriting process significantly smoother.

The way brokers think about motor carrier insurance often falls short in light of today’s challenges.

“A lot of brokers are still relying too heavily on the motor carrier’s cargo policy as the primary protection for a shipper’s freight,” Cannon said. “The problem is that motor carrier cargo policies may contain theft exclusions, fraud exclusions, sublimits, restrictive warranties, or other limitations that are not discovered until after a loss occurs.”

Exposure compounds when brokers have assumed contractual liability to shippers through their transportation agreements. If the carrier’s policy doesn’t respond, the broker absorbs the hit.

Cannon cautioned against treating a certificate of insurance as anything more than what it is. “A COI is only a snapshot showing a policy may exist on a given day,” she said. “It doesn’t guarantee the policy is active, adequate, or designed to respond to the specific loss scenario involved.”

Instead, Cannon said, brokers need to evaluate their own insurance programs with the same rigor they apply to carrier selection, building coverage stacks that include include primary or broad contingent cargo, broker liability, cyber, and other specialized products like shipper’s interest or fraud theft endorsements designed to close the gaps that fraud creates.

Reliance Partners helps clients present their risk profile to the marketplace as effectively as possible. From that vantage point, the underwriting community rewards strong controls, but not automatically.

“Markets absolutely give weight to enhanced vetting protocols, telematics, tracking, identity-verification tools, and documented carrier-selection procedures,” Cannon said. “But it is not always a simple ‘buy this tool and get a discount’ situation. Underwriters want to know how and if the technology is actually being used.”

That means the questions go deeper than whether a platform is installed. Underwriters want to know who reviews alerts, what happens when a carrier is flagged, whether exceptions are documented, and whether high-value loads are handled differently. Cannon compared it to basic automotive safety: “Think of it like a seatbelt. It helps, but only if you actually buckle it.”

Strong controls can translate into better terms, higher limits, reduced underwriting friction, and preserved market access. Weak controls, Cannon warned, can have the opposite effect, particularly in a hardening cargo market where capacity to absorb risk is shrinking.

The FMCSA recognizes broker and carrier fraud as criminal activity, but the current regulatory framework hasn’t kept pace with the speed and sophistication of modern fraud operations.

“The biggest difference would come from stronger identity verification at the federal registration level, faster action when fraud is reported, better data sharing among law enforcement and industry stakeholders, and tougher consequences for repeat offenders,” Cannon said.

However, brokers cannot afford to wait for Washington to solve the problem. Internal controls, written vetting procedures, documented carrier verification, tracking requirements, employee training, and properly structured insurance programs are the immediate line of defense.

“The industry cannot treat freight fraud like a paperwork issue anymore,” Cannon said. “It’s a financial risk, an operational risk, a reputational risk, and an insurance coverage risk. The brokers who understand that can better protect their customers and their own balance sheet.”

Click here to learn more about Reliance Partners.